Avid investors prepped for Apple surprises at NAB

Investment research firm PiperJaffray on Thursday cautioned shareholders of video production firm Avid Technology, Inc. that shares could experience some short-term volatility should Apple Inc. pull something from its sleeve at next month's NAB conference.

Sr. Analyst Gene Munster, who maintains an outperform rating on shares of Avid, told investors that the "talk on the Street" is that Apple is planning an event for April 15th at the National Association of Broadcasters (NAB) conference in Las Vegas, Nevd.

"At last year's NAB, expectations were that Apple would announce a high end version of Final Cut, but this did not materialize," he said." We believe that there is a greater than 50 percent chance that if Apple holds a special event at NAB, it will be the venue for this announcement."

Munster in a note to investors acknowledged that there is likely to be concern over what Apple may be holding, but said he does not believe a higher end version of Apple's Final Cut would end up significantly impacting Avid's pro post production business.

"Don't expect Avid Pro users to flock to Apple if a high-end version of Final Cut is announced," the analyst wrote. Although higher-end version of the Apple video editing software would likely offer a 15 to 20 percent price advantage over similar Avid software, surveys have shown that Avid Pro customers are less sensitive to price and more sensitive to brand and familiarity.

A recent study conducted by PiperJaffray of 161 post production professionals found that of those using an Avid system, only 6 percent were willing to consider switching to Apple in the next 12 months. Many others said they were not interested in switching to Apple, as Avid systems are what they've known for years. Several Avid Pro users also noted that "Avid is what professionals use, while Apple is what consumers and 'prosumers' use."

In his note to investors, Munster concluded that the Avid story is far from "squeaky clean," but said he believes it is getting closer to becoming a stable growing business again.

"While a high end version of Apple's Final Cut could be on par with Avid in many respects as far as functionality, Apple would be fighting a perception issue that pro editors have, as well as a loyalty to what they and the industry have been using for over a decade," he wrote.

What he says is true though. However newcomers to the business are usually more likely to consider other solutions than the accepted one than those already using it. Otherwise, the first solutions to any problem would be the only solutions, and none of the newer ones would ever have survived.

If Apple does come out with competition, they have a chance, though it might take years.

But ultimately Avid will have to lower prices and will lose alot of business. I doubt Avid Express and the mojo would even exist if FCP wasn't around. They'd still be making people buy their $25,000 starter system.

As an editor that has used Avid and FCP for years, there is a perception that Avid is the king, but that will change. I personally like FCP way more after using them both. Avid requires remembering hundreds of key strokes and keyboard commands and is thus less-user friendy, (which FCP can mimick perfectly), is more expensive, and is overall just too finicky. Avid & Digidesign have owned the entertainment world for the last 20-30 years and I've always used their products, but better and cheaper things have and will come out and they'll loose some business. It will take time, but many people will eventually switch, and new ones that aren't 'stuck' in the Avid world will avoid them.

This is a parallel situation to what happened with the music industry. When the tools of the trade went digital, every major studio on earth invested in Pro Tools, because it was the most powerful system at the time. Of course, that required a huge investment in special hardware, because the computers of the day weren't powerful enough to handle the processing in software.

Now that computers have caught up, and most of that extra hardware is no longer needed, cheaper and better solutions (Logic, Cubase, etc.) have come along. But the studio is slow to make the switch, because it's already invested so much money in Pro Tools. And the people working in the studios don't want to swich, either. When all of your experience and training is on one system, you're not going to push to make a switch, thus making all of your knowledge and experience irrelevant.

What's happening now, finally, is that musicians are recording their own works at home, on cheaper systems, saving themselves the high cost of studio time. Thus, the cheaper software solutions gain popularity through the independent movement. I suspect the same will happen for Final Cut, if they release a higher-end version that's significantly cheaper than Avid.

Investment research firm PiperJaffray on Thursday cautioned shareholders of video production firm Avid Technology, Inc. that shares could experience some short-term volatility should Apple Inc. pull something from its sleeve at next month's NAB conference.

Sr. Analyst Gene Munster, who maintains an outperform rating on shares of Avid, told investors that the "talk on the Street" is that Apple is planning an event for April 15th at the National Association of Broadcasters (NAB) conference in Las Vegas, Nevd.

"At last year's NAB, expectations were that Apple would announce a high end version of Final Cut, but this did not materialize," he said." We believe that there is a greater than 50 percent chance that if Apple holds a special event at NAB, it will be the venue for this announcement."

Munster in a note to investors acknowledged that there is likely to be concern over what Apple may be holding, but said he does not believe a higher end version of Apple's Final Cut would end up significantly impacting Avid's pro post production business.

"Don't expect Avid Pro users to flock to Apple if a high-end version of Final Cut is announced," the analyst wrote. Although higher-end version of the Apple video editing software would likely offer a 15 to 20 percent price advantage over similar Avid software, surveys have shown that Avid Pro customers are less sensitive to price and more sensitive to brand and familiarity.

A recent study conducted by PiperJaffray of 161 post production professionals found that of those using an Avid system, only 6 percent were willing to consider switching to Apple in the next 12 months. Many others said they were not interested in switching to Apple, as Avid systems what they've known for years. Several Avid Pro users also noted that "Avid is what professionals use, while Apple is what consumers and 'prosumers' use."

In his note to investors, Munster concluded that the Avid story is far from "squeaky clean," but said he believes it is getting closer to becoming a stable growing business again.

"While a high end version of Apple's Final Cut could be on par with Avid in many respects as far as functionality, Apple would be fighting a perception issue that pro editors have, as well as a loyalty to what they and the industry have been using for over a decade," he wrote.

After spending $100,000's over the years nobody is going tell these people that they can get the same thing for $10,000. No siree. That's not how you cover your ass in a business.

FCP outsells Avid by a margin. Its only the larger houses that can afford and appreciate the higher performance and integration that Avid systems can give them. Apple are not specifically targeting these people; rather they are creating the sort of integrated solutions that their present customers are growing into, thereby not losing them to the evil Avid.

As someone mentioned above about music, Avid is part of an old paradigm where professional quality equipment cost tens of thousands of dollars. Editors ARE very faithful to programs that they've used for years, but as someone who in my 12 years in the business has worked across editing on film, A/B, Avid, M100, Premier, and now FCP; that FCP is definitely the easiest and most flexible system out there, and has come a long way in it's relatively short period of time. And is only getting better...

People who say Avid is for Pro's and FCP is for "prosumers" is just silly... Tell that to David Fincher who just edited ZODIAC on FCP.